TaxTMI 
TaxTMI 
2026 (9) TMI 1727
X X X X Extracts X X X X
X X X X Extracts X X X X
....d a show-cause notice calling upon the petitioner to explain as to why tax had not been deducted at source from the payment of Rs.70,00,00,000/- made by it to MSRDC and also to show cause as to why the company should not be treated as an assessee-in-default under Section 201(1) of the Act. The petitioner filed its written explanation, justifying that the payment in question did not attract the provisions relating to TDS. 4. Thereafter, the petitioner was issued a show-cause notice dated 18.03.2015 for alleged non-deduction of TDS at source, to which the petitioner objected and filed its response. 5. Ultimately, the Assessing Officer passed an order dated 23.04.2015 under Sections 201(1) and 201(1A) of the Act, treating the petitioner as an assessee-in-default for its failure to deduct tax at source amounting to Rs .6,70,80,235/-. 6. A sum of Rs. 5,89,25,714/- was also charged towards interest under Section 201(1A) of the Act and thus, a demand of Rs.12,60,65,949/- was raised. 7. The petitioner, being aggrieved by the said action, filed a writ petition being Special Civil Application No. 10232 of 2015. 8. By order dated 23.02.2016, the impugned notices dated 10.01.201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w of the specific provisions of Section 244A(1B) of the Act, which were inserted with effect from 01.04.2017 by the Finance Act, 2017. As far as the provision of Section 244A(1B) of the Act are concerned, since the order giving effect to the grant of refund was passed by the CIT (Appeals) on 23.06.2016, the petitioner is not entitled to interest on the refund. 15. We have heard the learned counsel for the respective parties at length. 16. The facts, which are established from the record and pleadings, are that pursuant to the demand raised by the Revenue of Rs.12,60,65,949/-, the petitioner deposited an amount of Rs. 2,50,00,000/- in installments starting from 30.09.2015 and ending on 03.02.2017 under protest. 17. Simultaneously, the petitioner challenged the action of the Revenue in raising the demand on TDS by filing a writ petition being Special Civil Application No.10232 of 2015. By order dated 23.02.2016, this Court, while placing reliance on the decision of the Division Bench in the case of Tata Teleservices (supra), allowed the writ petition and quashed and set aside the impugned notices and the order dated 23.04.2015. Thus, the status of the petitioner as an assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period,- (i) from the 1st day of April of the assessment year to the date on which the refund is granted, if the return of income has been furnished on or before the due date specified under sub-section (1) of section 139; or (ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub-clause (i); (aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted: Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 143 or on regular assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest if the refund is ordered to be paid under the provisions mentioned therein. Thus, prior to insertion of Section 244(1B) of the Act, the grant of interest in "any other case" is governed by Section 244(A)(1)(b) of the Act, which takes care of the situation as presented in the present case. 24. At this stage, it would be apposite to refer to the decision of the Supreme Court in the case of Tata Chemicals Limited (supra), which reads as under: "25. Before the insertion of Section 244A as a composite Section by the Direct Tax Laws (Amendment) Act, 1987, the liability to pay interest on refund of pre-paid taxes was contained in Sections 214, 243 read with Section 244 (1A) of the Act. The Parliament has introduced a new Section in the place of Sections 214, 243 and 244 in respect of assessment for the assessment year 1989-90 and onwards. 26. The language of the Section is precise, clear and unambiguous. Sub-Section (1) of Section 244A speaks of interest on refund of the amounts due to an assessee under the Act. The assessee is entitled for the said amount of refund with interest thereon as calculated in accordance with clause (a) & (b) of sub-Section (1) of S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/ deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restric....